Marketing services Chapter 15

1. Marketing servicesChapter 15

2. Introduction • Phenomenal growth of services, with the resultant shift towards a service economy attributed to rising affluence, more leisure time and growing complexity of products that require servicing. • In major European countries, USA and Japan, private and public sector services account for 60-75% of gross domestic output.

3. Introduction • Service industries vary greatly from governmental organisations such as the National Health Service of the United Kingdom to private non profit organisations such as museums and charities.

4. The nature of services • A service is defined as any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. • The same general principles of marketing apply to both products and services, but services have characteristics that mean that instead of four P's, there are seven in a services marketing mix.

5. Services defined • A service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

6. Services defined • Most company offerings to customers contain an element of service and this is illustrated by the service continuum. Figure 15.1 The tangible–intangible continuum for goods and services

7. Categorising offerings along the service continuum • Pure tangible goods • toothpaste • Tangible goods accompanied by one or more service • computer and warranty • Hybrid offer consists of equal parts of goods and services • restaurants • Service with accompanying minor goods • air travel • Pure service • haircut

8. Service characteristics • Intangibility • Inseparability • Variability • Perishability • Lack of ownership

9. Intangibility • Cannot be seen, tasted, felt, heard or smelt before they are bought. • Service providers need to manage the evidence by providing evidence of the benefits.

10. Inseparability • Services produced and consumed simultaneously. • Cannot be separated from providers, whether people or machines. • Customers are always involved

11. Variability • Quality may vary greatly depending on who provides the service, when and how. • Staff need to know how to do something well. • Staff must be well motivated to maintain high standards of service.

12. Perishability • Services cannot be stored for later sale or use.

13. Lack of ownership • No physical product is exchanged and therefore nothing owned.

14. Marketing strategies for service firms • The service component and support processes of product offerings are rapidly becoming the competitive advantage in winning customer loyalty.

15. The service–profit chain • Internal service quality • Superior selection and training of staff • Satisfied and productive service employees • Greater service value • Satisfied and loyal customers • Healthy service – profits and growth

16. Three types of interdependent marketing in service industries • Internal marketing • External marketing • Interactive marketing

17. Internal marketing • Marketing conducted by a service firm to train and effectively motivate its customer contact employees and all the supporting service people to work as a team to provide customer satisfaction.

18. Major tasks of service industries • Service companies are faced with three major marketing tasks; they need to: • increase competitive differentiation • increase service quality • increase productivity

19. Managing service quality • The key to success is to exceed customer service quality expectations. • Customer satisfaction is achieved if the delivered service quality exceeds the customer’s expectation. • However, expectation is a variable component and depends upon the perception and expectations of the individual customer.

20. Characteristics of service organisations • Customer obsession • Management commitment to quality • High service quality standards • Scrutinise service performance • Good service recovery and management of disgruntled customers • Empowerment of employees, especially front-line staff • Satisfy and reward employees as well as customers